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LBT
LILII
LBT - Liberty International Plc - Quarterly Report For The Period Ended
31 March 2008
LIBERTY INTERNATIONAL PLC
(Registration number UK3685527)
ISIN Code: GB0006834344
JSE Code: LBT
Issuer Code: LILI
7 May 2008
LIBERTY INTERNATIONAL PLC
QUARTERLY REPORT FOR THE PERIOD ENDED 31 MARCH 2008
Attached is the quarterly report for the period ended 31 March 2008:
Highlights
Summary of Investment and Development Properties
Operating and Financial Review
Unaudited Financial Information
Sir Robert Finch, Chairman of Liberty International, commented:
"Liberty International`s net asset value per share (diluted, adjusted) has
declined from 1264p to 1181p reflecting unsettled property market conditions in
the UK.
However, our prime UK regional shopping centres which constitute some 75 per
cent of our business continue to demonstrate their defensive merits with stable
and resilient income streams and a 98.5 per cent occupancy level.
We have substantially expanded the business of Capital & Counties in recent
years and these activities , including the Covent Garden Estate, Earls Court &
Olympia, the Great Capital Partnership and our international businesses ,
continue to trade encouragingly.
In addition to the high quality developments on which we are currently engaged,
especially at St David`s, Cardiff and Eldon Square, Newcastle, we are pursuing
a broad range of active management initiatives and development prospects within
our existing GBP8.3 billion of investment properties. While such activity is
subject to suitable market conditions, these prospects provide substantial
scope for future organic growth.
Liberty International has a business of exceptional quality, a high degree of
specialisation on prime retail which constitutes around 90 per cent of our
assets, the benefits of scale and financial strength with a prudent debt to
assets ratio and long-term fixed-rate debt.
We remain confident in the ability of the company to respond to the more
difficult conditions now prevailing in commercial property and retail markets."
7 May 2008
This announcement includes statements that are forward-looking in nature.
Forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements
of Liberty International PLC to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Any information contained in this announcement on
the price at which shares or other securities in Liberty International PLC have
been bought or sold in the past, or on the yield on such shares or other
securities, should not be relied upon as a guide to future performance.
A conference call with analysts and investors will take place at 9.30am on 7
May 2008.
Enquiries:
Liberty International PLC:
Sir Robert Finch Chairman +44 (0)20 7960 1273
David Fischel Chief Executive +44 (0)20 7960 1207
Ian Durant Finance Director +44 (0)20 7960 1210
Public relations:
UK: Michael Sandler, Hudson Sandler +44 (0)20 7796 4133
SA: Gareth David ,
College Hill Associates +44 (0)20 7457 2020
Nicholas Williams,
College Hill Associates +27 (0)11 447 3030
BACKGROUND ON LIBERTY INTERNATIONAL
LIBERTY INTERNATIONAL PLC is one of the UK`s largest listed property companies
and a constituent of the FTSE-100 Index of the UK`s leading listed companies.
Liberty International converted into a UK Real Estate Investment Trust (REIT)
on 1 January 2007.
Liberty International owns 100 per cent of Capital Shopping Centres ("CSC"),
the premier UK regional shopping centre business, and of Capital & Counties, a
retail and commercial property investment and development company.
At 31 December 2007, Liberty International held GBP8.6 billion of total
properties of which UK regional shopping centres comprised 75 per cent and
retail property in aggregate 88 per cent. Shareholders` funds (diluted,
adjusted) amounted to GBP4.7 billion. Assets of the group under control or
joint control amounted to GBP11. 0 billion at that date.
CAPITAL SHOPPING CENTRES has interests in 14 UK regional shopping centres
amounting to 12.6 million sq.ft. in aggregate including 8 of the UK`s top 21
regional shopping centres with a market value of GBP6.5 billion at 31 December
2007. CSC`s largest centres are Lakeside, Thurrock; MetroCentre, Gateshead;
Braehead, Renfrew, Glasgow; The Harlequin, Watford; and Manchester Arndale. In
addition, CSC has three major development projects in progress or with planning
permission in Cardiff, Newcastle and Oxford.
CAPITAL & COUNTIES owned assets of GBP2.2 billion at 31 December 2007 amounting
to 7.2 million sq.ft. in aggregate. Capital & Counties had around GBP664
million invested in the Covent Garden area including the historic Covent Garden
Market, and around GBP353 million in Central London, primarily through the
Great Capital Partnership, a joint venture with Great Portland Estates plc.
Capital & Counties acquired 50 per cent of EC&O Venues (Earls Court and Olympia
Group) in 2007 for a sum that valued the assets at approximately GBP375
million. In addition, Capital & Counties had interests in the USA amounting to
GBP381 million (2.7 million sq.ft.), predominantly comprising retail assets in
California, including the 856,000 sq.ft. Serramonte Shopping Centre, Daly City,
San Francisco.
LIBERTY INTERNATIONAL PLC
HIGHLIGHTS
Quarter Quarter Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
Net rental income GBP104m GBP91m GBP374m
Profit before tax (underlying)* GBP34m GBP36m GBP131m
(Deficit)/gain on revaluation
and sale of investment
properties GBP(345)m GBP156m GBP(279)m
(Loss)/profit before tax GBP(335)m GBP293m GBP(125)m
Total properties GBP8,341m ***GBP8,540m GBP8,666m
Net debt GBP3,639m ***GBP3,293m GBP3,668m
Net assets (diluted, adjusted) GBP4,448m GBP5,190m GBP4,757m
Basic earnings per share (84.7p) 75.4p (29.0p)
Adjusted earnings per share 8.4p 9.8p 36.0p
Dividend per share 34.1p
Net assets per share (diluted,
adjusted)** 1181p 1376p 1264p
* Before valuation and exceptional items.
** Net assets per share (diluted, adjusted) would increase by 100p per share to
1281 p at 31 March 2008 (31 March 2007 - by 100p to 1476p, 31 December 2007 -
by 104p to 1368p) if adjusted for notional acquisition costs amounting to
GBP375 million (31 March 2007 - GBP377 million, 31 December 2007 - GBP390
million).
*** Restated numbers for quarter ended 31 March 2007 now include 100 per cent
of MetroCentre, Gateshead rather than the 60 per cent previously reported - see
note 1 to the 31 March 2008 accounts
Note 15 to the 31 March 2008 accounts sets out full details and calculations of
basic and adjusted earnings per share and net assets (diluted, adjusted).
HIGHLIGHTS OF QUARTER ENDED 31 MARCH 2008
? Stable and resilient operating performance of CSC`s GBP6.2 billion UK
regional shopping centres
- like-for-like net rental income growth of 1.8 per cent
- high occupancy level of 98.5 per cent
? Valuation outcome
Quarter ended Year ended
31 March 31 December 2007
2008
- UK regional shopping centres - 4.5% - 3.9%
- UK non-shopping centre properties - 2.0% - 0.2%
- USA - 0.4% + 6.5%
- Total - 4.0% - 3.5%
? Change in valuation yields as follows:
Nominal equivalent yields
31 March 31 December
2008 2007
- UK regional shopping centres + 26bp 5.34% 5.08%
- UK non-shopping centre properties + 7bp 5.23% 5.16%
? Total return for the period minus 6.5 per cent, with net asset value per
share (diluted, adjusted) reduced from 1264p to 1181 p.
? Additions of GBP100 million including GBP51 million development expenditure
and GBP30 million as part of the Great Capital Partnership`s asset swap with
the Crown Estate.
? Disposals of GBP75 million at GBP1 million surplus to 31 December 2007 book
values
? Committed expenditure to complete current development programme around GBP300
million including
- St David`s 2, Cardiff opening Autumn 2009
- Eldon Square, South , Newcastle opening Spring 2010
? Robust financial position
- 44 per cent debt to assets ratio
- over GBP640 million cash and undrawn committed facilities
- no significant debt maturities before 2011
- debt mostly fixed-rate and asset-specific
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES
Market value Revaluation deficit
31 December 31 March
2007 2008 Increase/
GBPm GBPm GBPm (Decrease)
UK regional shopping centres
Lakeside, Thurrock 1,247.9 1,194.3 (53.3) (4.3)%
MetroCentre, Gateshead 1,010.0 962.3 (48.7) (4.8)%
Braehead, Glasgow 730.3 688.3 (46.2) (6.3)%
The Harlequin, Watford 506.2 481.7 (24.6) (4.9)%
Victoria Centre, Nottingham 444.8 429.1 (15.8) (3.6)%
Arndale, Manchester 418.5 400.9 (18.3) (4.3)%
Chapelfield, Norwich 324.5 311.7 (11.1) (3.5)%
Cribbs Causeway, Bristol 296.3 282.8 (13.5) (4.5)%
The Potteries, Stoke-on-Trent 278.3 271.9 (6.6) (2.4)%
The Chimes, Uxbridge 261.8 255.3 (7.0) (2.7)%
The Glades, Bromley 257.2 248.2 (10.1) (3.7)%
St David`s, Cardiff 101.2 98.9 (3.2) (3.1)%
Xscape, Braehead 39.8 38.5 (1.9) (5.2)%
Like-for-like capital
and income 5,916.8 5,663.9 (260.3) (4.4)%
Metro Retail Park 77.0 67.0 (10.0) (13.0)%
Eldon Square, Newcastle
upon Tyne 258.0 255.9 (9.7) (3.6)%
Like-for-like capital 6,251.8 5,986.8 (280.0) (4.5)%
Redevelopments and
developments 229.3 232.0 (17.4) (7.0)%
Total UK regional shopping
centres 6,481.1 6,218.8 (297.4) (4.6%)
UK non-shopping centre
properties
Like-for-like capital and
income 674.5 654.1 (20.9) (3.1)%
Like-for-like other 875.7 897.0 (10.0) (1.1)%
Like-for-like capital 1,550.2 1,551.1 (30.9) (2.0)%
Acquisitions - 19.1 (2.8) (12.9)%
Redevelopments and
developments 151.8 149.7 (14.0) (8.4)%
Disposals 71.0 - -
Total UK non-shopping centre
Properties 1,773.0 1,719.9 (47.7) (2.7)%
US properties*
Like-for-like capital and
income 327.8 326.4 (1.2) (0.4)%
Like-for-like other 53.0 52.7 (0.4) (0.8)%
Like-for-like capital 380.8 379.1 (1.6) (0.4)%
Total US properties 380.8 379.1 (1.6) (0.4)%
Total investment properties 8,634.9 8,317.8 (346.6) (4.0)%
Net rental income
31 March 31 March
2007 2008 Increase/
GBPm GBPm (Decrease)
UK regional shopping centres
Lakeside, Thurrock
MetroCentre, Gateshead
Braehead, Glasgow
The Harlequin, Watford
Victoria Centre, Nottingham
Arndale, Manchester
Chapelfield, Norwich
Cribbs Causeway, Bristol
The Potteries, Stoke-on-Trent
The Chimes, Uxbridge
The Glades, Bromley
St David`s, Cardiff
Xscape, Braehead
Like-for-like capital and income 68.3 69.5 1.8%
Metro Retail Park
Eldon Square, Newcastle upon Tyne
Like-for-like capital 70.7 73.6 4.1%
Redevelopments and developments 1.1 0.9
Total UK regional shopping centres 71.8 74.5 3.8%
UK non-shopping centre properties
Like-for-like capital and income 8.0 7.7 (3.7)%
Like-for-like other 0.4 16.0
Like-for-like capital 8.4 23.7
Acquisitions - 0.3
Redevelopments and developments 0.7 0.3
Disposals 5.4 0.4
Total UK non-shopping centre
Properties 14.5 24.7 70.3%
US properties*
Like-for-like capital and income 4.6 4.6 0.5%
Like-for-like other 0.4 0.5
Like-for-like capital 5.0 5.1
Total US properties 5.0 5.1 2.0%
Total investment properties 91.3 104.3 14.2%
*Like-for-like percentage changes are in local currency
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (Continued)
Property analysis by use and type
Revaluation
Market value Deficit
31 December 31 March
2007 2008 % of total Increase/
GBPm GBPm properties (Decrease)
Regional shopping centres and
other retail
UK regional shopping centres 6,481.1 6,218.8 74.8% (4.6)%
UK other retail 807.7 775.5 9.3% (2.2)%
US regional shopping centres 138.6 137.4 1.7% (0.5)%
US other retail 130.0 128.8 1.5% (0.9)%
Total regional shopping centres
and other retail 7,557.4 7,260.5 87.3% (4.2)%
Office
UK business space 583.8 553.6 6.7% (4.0)%
US business space 78.6 79.8 1.0% 1.1%
Total office 662.4 633.4 7.6% (3.4)%
Exhibition
UK Exhibition 381.4 390.9 4.7% (1.9)%
Residential
US residential 33.7 33.1 0.4% (1.7)%
Total investment properties 8,634.9 8,317.8 100.0% (4.0)%
Analysis of UK non-shopping centres and US properties by location and type
Market value
31 December 31 March
2007 2008
GBPm GBPm
UK non-shopping centre properties
Capco Covent Garden 663.6 649.4
Capco Earls Court 381.4 390.9
Capco London (inc. Great Capital Partnership) 353.2 352.6
Capco Opportunities 220 .5 208.7
Capco Urban 154.3 118.4
Total UK non-shopping centre properties 1,773.0 1,719.9
US properties
US retail 268.6 266.2
US business space 78.6 79.8
US residential 33.6 33.1
Total US properties 380.8 379.1
2,153.8 2,099.0
Revaluation deficit
31 March
2008 Increase/
GBPm (Decrease)
UK non-shopping centre properties
Capco Covent Garden (15.0) (2.2)%
Capco Earls Court (7.4) (1.9)%
Capco London (inc. Great Capital Partnership) (4.0) (1.1)%
Capco Opportunities (10.7) (5.0)%
Capco Urban (10.7) (8.4)%
Total UK non-shopping centre properties (47.7) (2.7)%
US properties
US retail (1.9) (0.7)%
US business space 0.9 1.1%
US residential (0.6) (1.7)%
Total US properties (1.6) (0.4)%
(49.4) (2.3)%
Net rental income
31 March 31 March
2007 2008
GBPm GBPm
UK non-shopping centre properties
Capco Covent Garden 5.2 6.5
Capco Earls Court - 10.9
Capco London (inc. Great Capital Partnership) 4.2 3.1
Capco Opportunities 3.1 3.1
Capco Urban 2.0 1.2
Total UK non-shopping centre properties 14.5 24.7
US properties
US retail 3.7 3.7
US business space 1.0 1.1
US residential 0.3 0.3
Total US properties 5.0 5.1
19.5 29.8
SUMMARY OF INVESTMENT AND DEVELOPMENT PROPERTIES (Continued)
UK investment property valuation data
Market
value Nominal equivalent yield
31 March
2008 31 December 31 March
GBPm 2007 2008
UK regional shopping centres
Lakeside, Thurrock 1,194.3 4.90% 5.15%
MetroCentre, Gateshead (including
Retail Park) 1,029.3 5.03% 5.28%
Braehead, Glasgow 688.3 5.02% 5.27%
The Harlequin, Watford 481.7 4.95% 5.25%
Victoria Centre, Nottingham 429.1 5.00% 5.25%
Arndale, Manchester 400.9 5.13% 5.37%
Chapelfield, Norwich 311.7 5.20% 5.45%
Cribbs Causeway, Bristol 282.8 5.06% 5.29%
The Potteries, Stoke-on-Trent 271.9 5.50% 5.75%
Eldon Square, Newcastle upon Tyne 255.9 5.25% 5.60%
The Chimes, Uxbridge 255.3 5.35% 5.60%
The Glades, Bromley 248.2 5.40% 5.65%
St. David`s, Cardiff 98.9 5.26% 5.44%
Xscape, Braehead 38.5 6.21% 6.43%
Like-for-like capital 5,986.8 5.08% 5.34%
Other 232.0
Total UK regional shopping centres 6,218.8
UK non-shopping centre properties
Capco Covent Garden 649.4 4.63% 4.70%
Capco London (inc. Great Capital
Partnership) 305.6 5.68% 5.56%
Capco Opportunities 146.7 6.29% 6.57%
Capco Urban 72.4 5.57% 5.79%
1,174.1 5.16% 5.23%
Exhibition 377.0
Like-for-like-capital 1,551.1
Exhibition-Acquisitions 13.9
Other 154.9
Total UK non-shopping centre
properties 1,719.9
Net rental
income ERV
31 March 31 March
2008 2008
GBPm GBPm
UK regional shopping centres
Lakeside, Thurrock
MetroCentre, Gateshead (including Retail Park)
Braehead, Glasgow
The Harlequin, Watford
Victoria Centre, Nottingham
Arndale, Manchester
Chapelfield, Norwich
Cribbs Causeway, Bristol
The Potteries, Stoke-on-Trent
Eldon Square, Newcastle upon Tyne
The Chimes, Uxbridge
The Glades, Bromley
St. David`s, Cardiff
Xscape, Braehead
Like-for-like capital 73.6 341.9
Other 0.9 5.3
Total UK regional shopping centres 74.5 347.2
UK non-shopping centre properties
Capco Covent Garden
Capco London (inc. Great Capital Partnership)
Capco Opportunities
Capco Urban
12.9 71.2
Exhibition 10.8
Like-for-like-capital 23.7 71.2
Exhibition-Acquisitions 0.1
Other 0.9 15.3
Total UK non-shopping centre properties 24.7 86.5
The passing rent as at 31 March 2008 was GBP284.5m in respect of the UK
Shopping Centres (GBP281.3m at 31 December 2007) and GBP60.7m in respect of UK
Non-Shopping Centres (GBP61.3m at 31 December 2007).
Glossary
ERV (Estimated Rental Value)
The external valuers` estimates of the group`s share of the current annual
market rent of all lettable space net of any non-recoverable charges, before
bad debt provision and adjustments to comply with International Accounting
Standards regarding tenant lease incentives.
Like-for-like income
The category of investment properties which have been owned throughout both
periods without significant capital expenditure in either period, so both
income and capital can be compared on a like-for-like basis.
Like-for-like capital
The category of investment properties which includes like-for -like income
properties, plus those which have been owned throughout the current period but
not the whole of the prior period, without significant capital expenditure in
the current period, so capital values but not income can be compared on a like-
for-like basis.
Net rental income
The group`s share of net rents receivable as shown in the Income Statement,
having taken due account of non-recoverable charges, bad debt provisions and
adjustments to comply with International Accounting Standards regarding tenant
lease incentives.
Nominal equivalent yield
Effective annual yield to a purchaser from the assets individually at market
value after taking account of notional acquisition costs but assuming rent is
receivable annually in arrears rather than reflecting the actual rental cash
flows.
Passing Rent
The group`s share of contracted annual rents receivable at the balance sheet
date. This takes no account of accounting adjustments made in respect of rent
free periods or tenant incentives, the reclassification of certain lease
payments as finance charges or any irrecoverable costs and expenses, and does
not include excess turnover rent, additional rent in respect of unsettled rent
reviews or sundry income such as from car parks etc.
OPERATING AND FINANCIAL REVIEW
Capital Shopping Centres (`CSC`)
CSC`s prime regional shopping centres are demonstrating their stability and
resilience in the more difficult retail market conditions currently being
experienced.
We have continued to conclude lettings with retailers keen to acquire well
configured space in CSC`s prime locations.
Occupancy levels remain high. As at 31 March 2008, the occupancy level was 98.5
per cent, compared with 98.7 per cent at 31 December 2007.
Progress with settlement of 2006 and 2007 rent reviews has continued to be
positive with the bulk of reviews now concluded and at anticipated levels. We
are currently engaged in 2008 reviews which predominantly relate to The Mall at
Cribbs Causeway, Bristol.
The two major regional shopping centre developments under construction are the
967,500 sq.ft. St David`s, Cardiff extension, anchored by the John Lewis
Partnership, opening in Autumn 2009 and the 480,000 sq.ft. redevelopment of
Eldon Square, Newcastle where the largest phase opens in Spring 2010.
At St David`s, Cardiff, lettings continue to progress satisfactorily with over
40 per cent of the space either exchanged or in solicitors` hands (27 per cent
by income). At Eldon Square, over 60 per cent of the largest phase, the
Southern Gateway, is committed by income.
The compulsory purchase order to facilitate the redevelopment of the Westgate
Centre in Oxford has now been confirmed. We are currently reviewing our
financing options for this project following the rearrangement of the
partnership structure in 2007 which increased our participation in the project.
We are engaged on a considerable number of other active management and
expansion projects across our CSC centres notably at The Glades, Bromley;
MetroCentre, Gateshead; Braehead, Glasgow and Cribbs Causeway, Bristol.
Capital & Counties
Capital & Counties has had a good start to 2008.
We are progressively implementing our masterplan for the GBP650 million Covent
Garden Estate.
The Great Capital Partnership, our GBP660 million joint venture with Great
Portland Estates, has reported a substantial and positive restructuring with
The Crown Estate involving over GBP350 million of assets. The partnership has
also concluded a GBP225 million non-recourse secured loan maturing in 2013 to
refinance the partners` equity investment in the joint venture and also provide
financial resources for asset repositioning and investment projects.
The Earls Court & Olympia business is trading well and we are actively pursuing
the opportunity to intensify use at these locations.
Aggregate disposals for the period amounted to GBP75 million at a surplus of
GBP1 million over 31 December 2007 book values, including GBP45 million of
non-core assets held by Capco Urban and Capco Opportunities and GBP30 million
as part of the restructuring of Great Capital Partnership assets with the Crown
Estate.
In the USA, our business is performing very satisfactorily and we have recorded
a $10 million disposal of a non-core asset.
In addition to the group`s activities in the USA, other international
initiatives in India and China progressed well. Our joint venture in India,
Prozone Liberty, is focused on delivering its first regional shopping centre in
Aurangabad in 2009 and is planning to commence work on three similar projects
in other major second-tier Indian cities. In China, our first investment
alongside China Resources in a real estate fund managed by Harvest Capital
progressed positively and further co-operation with our partners is
anticipated.
Property valuations and net asset value estimate
We noted on 13 February 2008 when announcing Liberty International`s 2007
annual results that upward pressure on commercial property valuation yields had
continued into 2008.
The group`s first quarter results to 31 March 2008 contain full details of
property valuations.
At our UK regional shopping centres, which at 31 December 2007 comprised 75 per
cent of Liberty International`s aggregate GBP8.6 billion of investment
properties, the nominal equivalent yields used for valuations (which averaged
5.0 8 per cent at the year end) increased by 26 basis points in the quarter to
5.34 per cent. UK shopping centre valuations reduced by 4.5 per cent, with 5.1
per cent attributable to the change in yields offset by a 0.6 per cent rise in
rental values used by the valuers.
The remaining 25 per cent of the group`s assets held by Capital & Counties saw
an overall reduction in valuation in the first quarter of a more modest 2.3 per
cent with strong performances from Central London assets and the US business.
In aggregate, predominantly reflecting valuation movements, adjusted net asset
value per share reduced from 1264p at 31 December 2007 to 1181p at 31 March
2008.
Although shareholders buying our shares only pay stamp duty at 0.5 per cent on
share transactions, the assumption contained within the valuations is that our
assets would be sold individually to purchasers who would pay the full 4 per
cent stamp duty land tax applicable to large property transactions and other
notional acquisition costs. This factor would have increased net asset value at
31 March 2008 by around GBP375 million, representing around 100p per share over
and above the adjusted net asset value per share of 1181 p (31 December 2007 -
104p per share over the published figure of 1264p per share).
Basis of preparation of results for the quarter ended 31 March 2008
The comparative columns for the first quarter of 2007 have been restated to
reflect fully consolidated accounting for the group`s interest in the
MetroCentre Partnership with a minority interest rather than the proportionate
consolidation shown in the first quarter last year. This revised treatment
reflects the contractual relationship between the parties.
In addition, the results reflect an impairment charge of GBP21.6 million
relating to the goodwill associated with the Covent Garden restaurants ,
acquired in the last quarter of 2007. The acquisition of these restaurants
provided the access to leases which will in time be reflected in the uplift of
the property values. In the meantime in accordance with IAS 36, the cashflow
from these units has been reviewed and the group has determined that it is not
appropriate to maintain the goodwill on the balance sheet.
Underlying profit before tax
The underlying profit before tax and excluding valuation and exceptional items
was as follows:
Three months ended Three months ended Year ended
31 March 2008 31 March 2007 31 December
2007
GBPm GBPm GBPm
Net rental income 104.3 91.3 374.3
Other income 1.5 0.4 2.0
Administration
expenses (14.5) (7.4) (45.2)
Interest payable
less receivable (57.4) (48.4) (200.5)
Underlying profit
before tax 33.9 35.9 130.6
Net rental income increased by 14 per cent from GBP91.3 million in the first
quarter of 2007 to GBP104.3 million in 2008 with the bulk of the increase
coming from recent Capital & Counties` acquisitions, especially Earls Court and
Olympia which contributed GBP10.9 million in the quarter (31 March 2007 - nil,
31 December 2007 - GBP10.1 million).
Underlying finance costs increased from GBP48.4 million in the first quarter of
200 7 to GBP57.4 million (year ended 31 December 2007 - GBP200.5 million)
reflecting investment expenditure in 2007.
Including GBP2.5 million from Earls Court and Olympia, administration expenses
increased to GBP14.5 million (31 March 2007 - GBP7.4 million, 31 December 2007
- GBP45.2 million including GBP5.2 million from Earls Court and Olympia).
The increased administration expenses also reflect CSC`s active development
programme and the substantial recent expansion of the activities of Capital &
Counties , with the recruitment of experienced personnel to pursue active
management and development opportunities within Covent Garden, Earls Court and
Olympia, Capco Urban, and overseas activities . Administration expenses in the
first quarter of 2007 benefited from the write-back of excess provisions from
the previous year.
Reflecting the above factors, underlying profit before tax reduced from GBP35.9
million for the quarter ended 31 March 2007 to GBP33.9 million for the quarter
ended 31 March 2008 (year ended 31 December 2007 - GBP130.6 million). After
taking account of tax and minority interests, adjusted earnings per share for
the quarter amounted to 8.4p (31 March 2007 - 9.8p, 31 December 2007 - 36.0p).
Financial position
Liberty International has a strong financial position with unutilised committed
financial facilities at 31 March 2008 of GBP510 million and cash balances of
GBP130 million, substantially in excess of our commitments.
The group`s debt structure is robust with predominantly fixed-rate,
asset-specific and non-recourse financing with no signific ant maturities
before 2011.
At 31 March 2008, Liberty International`s net debt was GBP3,639 million,
representing a debt to assets ratio of 44 per cent (31 December 2007 - 42 per
cent).
The weighted average maturity of the group`s debt was 6.6 years and the
weighted average cost of debt was approximately 6.0 per cent and fully hedged
against interest rate movements.
The group`s borrowings are predominantly secured on property assets on a
non-recourse basis. The market value of charged property assets was GBP6,979
million (31 December 2007 - GBP6,894 million) with attached debt of GBP3,540
million (31 December 2007 - GBP3,501 million), giving rise to a loan to value
ratio of 51 per cent (31 December 2007 - 51 per cent).
At 31 March 2008, the market value of the uncharged property assets or
interests was GBP1,339 million (31 December 2007 - GBP1,805 million) with
unsecured net debt of GBP99 million (31 December 2007 - GBP124 million).
During the first quarter of 2008, the spreads on traded Commercial
Mortgage-Backed Securities (`CMBS`) debt widened significantly and the group
repurchased GBP95.4 million nominal of bonds related to certain of CSC`s
shopping centres for a consideration of GBP83.6 million. These bonds will be
held by the group as part of its ongoing treasury operations and the GBP11.8
million profit earned was recognised in the Income Statement in the quarter
ended 31 March 2008 as exceptional finance income.
At 31 March 2008 long-term interest rates were little changed from the level of
31 December 2007, with the 10 year sterling swap rate decreasing by 7 basis
points from 5.02 per cent to 4.95 per cent. As a result, there was no
significant valuation movement on the group`s derivative financial instruments
during the first quarter.
Developments
Contemporary development demands a rigorous approach to the creation of large
scale composite projects. The group has been a leader in this area for many
years and possesses extensive experience in all aspects of development and
project-execution skill sets. These have now been focused respectively in the
newly-formed business units of Liberty International Developments and Liberty
International Project Management which will spearhead future initiatives in
retail-led mixed- use development.
The group`s investment and development commitments at 31 March 2008 amounted to
GBP328 million.
Details of redevelopment and development properties are set out below :
Property Development Revaluation for
expenditure in quarter ended
quarter ended 31 March 2008
31 March 2008
GBPm GBPm
Capital Shopping Centres
St David`s 2, Cardiff 14.2 (7.8)
Westgate, Oxford 6.0 (7.4)
Other - (2.2)
20.2 (17.4)
Capital & Counties 11.7 (14.0)
Redevelopments and
developments 31.9 (31.4)
Property Market Value Cost to complete
31 March 2008 as at 31 March
2008
GBPm GBPm
Capital Shopping Centres
St David`s 2, Cardiff 145.2 178.0
Westgate, Oxford 35.0 Uncommitted at 31
March 2008
Other 51.8 Uncommitted at 31
March 2008
232.0 178.0
Capital & Counties 149.7 31.0
Redevelopments and
developments 381.7 209.0
In addition, GBP6.7 million was incurred in the quarter on the Southern Gateway
redevelopment at Eldon Square, Newcastle which is included within completed
investment properties , with CSC`s share of costs to complete amounting to
GBP50 million at 31 March 2008.
Other commitments at 31 March 2008 amounted to GBP69 million including GBP37
million for overseas investments and GBP32 million on existing completed
investment properties.
Prospects
In the view of the directors of Liberty International, further upward movement
in valuation yields may well be experienced in 2008 as investment property
markets remain unsettled in the light of ongoing uncertainty in financial
markets and the general tightening of credit conditions. It is currently too
early to assess the full impact of these factors on the general performance of
the UK economy and specifically for the property industry. In particular,
rental levels are likely in the next few years to become an increasingly
important factor in valuation performance.
In addition to the high quality developments on which we are currently engaged,
especially at St David`s, Cardiff and Eldon Square, Newcastle, we are pursuing
a broad range of active management initiatives and development prospects within
our existing GBP8.3 billion of investment properties. While such activity is
subject to suitable market conditions, these prospects provide substantial
scope for future organic growth.
The directors believe that Liberty International`s continued focus on
predominantly retail assets of the highest quality positions the company well
in the more difficult real estate market conditions now prevailing.
7 May 2008
CONSOLIDATED INCOME STATEMENT (unaudited)
For the three months ended 31 March 2008
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Notes
Revenue 2 172.0 129.0 574.6
Rental income 162.9 128.7 546.7
Rental expenses (58.6) (37.4) (172.4)
Net rental income 2 104.3 91.3 374.3
Other income 1.5 0.4 2.0
Gain / (deficit) on
revaluation and
sale of investment
and development
property 3 (345.5) 156.3 (279.1)
(239.7) 248.0 97.2
Administration
expenses
Ongoing expenses (14.5) (7.4) (45.2)
Impairment of
goodwill 4 (21.6) - -
Operating profit /
(loss) (275.8) 240.6 52.0
Interest payable 5 (58.4) (49.7) (209.3)
Interest receivable 1.0 1.3 8.8
Exceptional finance
income/ (costs ) 5 2.1 (8.3) (3.3)
Change in fair
value of derivative
financial
instruments (3.5) 109.2 27.0
Net finance costs (58.8) 52.5 (176.8)
Profit/(loss)
before tax (334.6) 293.1 (124.8)
Taxation 6 3.6 (20.4) (30.4)
Profit/(loss) for
the period (331.0) 272.7 (155.2)
Minority interests 7 24.8 - 50.2
Profit/(loss) for
the period
attributable to
equity shareholders (306.2) 272.7 (105.0)
Ordinary dividends
- paid and proposed - - 123.3
- pence per share - - 34.1p
Basic earnings per
share 15 (84.7)p 75.4p (29.0)p
Diluted earnings
per share 15 (81.2)p 72.8p (26.6)p
Adjusted earnings per share are shown in note 15.
CONSOLIDATED BALANCE SHEET (unaudited)
As at 31 March 2008
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Notes
Non-current assets
Goodwill 4 5.2 - 26.6
Investment and
development property 9 8,303.0 8,492.1 8,622.8
Plant and equipment 1.0 0.9 1.2
Investments 52.8 7.5 51.0
Trade and other
receivables 11 78.1 69.0 78.5
8,440.1 8,569.5 8,780.1
Current assets
Trading property 10 37.6 47.7 43.7
Trade and other
receivables 11 180.6 345.8 160.3
Cash and cash equivalents 129.9 60.5 188.4
348.1 454.0 392.4
Total assets 8,788.2 9,023.5 9,172.5
Current liabilities
Trade and other payables (331.4) (230.1) (341.7)
Tax liabilities (4.0) (0.2) (5.7)
Borrowings, including
finance leases 12 (74.7) (152.8) (152.3)
Derivative financial
instruments (94.6) (45.0) (97.8)
(504.7) (428.1) (597.5)
Non-current liabilities
Borrowings, including
finance leases 12 (3,694.5) (3,200.7) (3,704.0)
Deferred tax provision 6 (69.8) (62.3) (73.7)
Other provisions (1.4) (3.7) (1.4)
Other payables (95.0) (143.8) (87.0)
(3,860.7) (3,410.5) (3,866.1)
Total liabilities (4,365.4) (3,838.6) (4,463.6)
Net assets 4,422.8 5,184.9 4,708.9
Equity
Called up share capital
and reserves 4,201.1 5,008.5 4,507.0
Minority interests 221.7 176.4 201.9
Total equity 16 4,422.8 5,184.9 4,708.9
Diluted, adjusted net
assets per share 15 1181p 1376p 1264p
Basic net assets per share 15 1161p 1384p 1246p
CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE (unaudited)
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Profit/(loss) for the period
as per the consolidated
income statement
before minority interest (331.0) 272.7 (155.2)
Other recognised income and
expense in the period:
Actuarial losses on defined
benefit pension schemes - - (2.0)
Tax on items taken directly
to equity - - 0.5
Gains on revaluation of
investments, net exchange
translation differences and
other movements 0.2 2.3 6.4
Net losses recognised in
equity due to minority
interests (on the above) - - (0.7)
Net gains recognised in equity 0.2 2.3 4.2
Total recognised income and
(expense) for the period (330.8) 275 .0 (151.0)
Total recognised expense
attributable to minority
interests 24.8 - 50.9
Total recognised income and
(expense) for the period
attributable to
equity shareholders (306.0) 275 .0 (100.1)
A summary of changes in group equity is shown in note 16.
CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Cash flows from operating
activities
Operating profit/(loss) (275.8) 240.6 52.0
Adjustments for non-cash items:
Unrealised net revaluation
(gains)/ losses on investment
property 346.6 (140.2) 316.5
Profit on sale of investment
property (1.1) (16.1) (37.4)
Depreciation and amortisation 0.1 - 0.3
Impairment of goodwill 21.6 - -
Amortisation of lease
incentives and other direct costs (1.9) 0.9 (1.6)
Cash flows from operations
before changes in working capital 89.5 85.2 329.8
Change in trade and other
receivables 15.3 9.4 (6.4)
Change in trading properties 6.1 (14.6) 8.5
Change in trade and other payables 23.3 (63.5) (65.1)
Cash generated from operations 134.2 16.5 266.8
Interest paid (61.3) (48.4) (222.0)
Interest received 1.1 1.6 9.8
Tax paid (23.1) - (12.9)
Cash flows from operating activities 50.9 (30.3) 41.7
Cash flows from investing activities
Purchase and development of property (85.5) (170.1) (575.5)
Sale of property 0.7 10.5 459.2
Purchase of subsidiary companies - - (80.0)
Purchase of non-current
asset investments (3.5) (7.5) (39.2)
Cash flows from investing
activities (88.3) (167.1) (235.5 )
Cash flows from financing activities
Issue and repurchase of shares 0.1 1.1 (3.1)
Borrowings drawn 142.5 115.0 382.6
Borrowings repaid (79.2) (180 .0) (197.0)
Repurchase of CMBS notes (84.5) - -
Equity dividends paid - - (122.1)
Cash flows from financing
activities (21.1) (63.9) 60.4
Net decrease in cash and cash
equivalents (58.5) (261.3) (133.4)
Cash and cash equivalents at
beginning of period / year 188.4 321.8 321.8
Cash and cash equivalents at
end of period / year 129.9 60.5 188.4
NOTES TO THE ACCOUNTS (unaudited)
1 Basis of preparation
The Interim Report is unaudited and does not constitute statutory accounts
within the meaning of s240 of the Companies Act 1985. The auditor`s opinion on
the statutory accounts for 2007, which were prepared in accordance with
International Financial Reporting Standards as endorsed by the European Union
("IFRS"), IFRIC interpretations and with those parts of the Companies Act 1985
applicable to companies reporting under IFRS, was unqualified and did not
contain a statement made under s237(2) or s237(3) of the Companies Act 1985.
The financial information has been prepared using the accounting policies set
out on pages 2 6 and 27 of the Group`s Annual Report for 2007.
In the financial accounts for the year ended 31 December 2007 the MetroCentre
Partnership was consolidated as a subsidiary, with effect from the formation
date of 25 March 2007, reflecting the control exercised by Liberty
International. This had previously been treated on a proportional consolidation
basis. The directors therefore believe it to be appropriate that this revised
treatment is reflected in the figures for 31 March 2007 and have re-stated the
figures accordingly.
The overall impact on net asset value of the group is GBPnil. However, the
impact on the individual lines is as follows:
Three months Six months Nine months
ended ended ended
31 March 30 June 31 September
2007 2007 2007
GBPm GBPm GBPm
Balance sheet
Increase in property value 423.7 436.8 436.8
Increase in current assets -
IFRS adjustment 2.3 2.3 2.3
Increase in current liabilities (16.0) (16.0) (43.0)
Increase in finance loan (233.6) (232.8) (232.0)
Overall increase in
minority interest 176.4 190.3 164.1
Income statement
Decrease in profit on sale of
property (16.0) (16.0) (16.0)
Increase in property valuation gain 16.0 16.0 16.0
Increase in net rental income - 5.2 9.6
Increase in valuation movement - 2.4 0.4
Increase in finance interest
charge - (3.6) (7.2)
Movement in minority interest - 4.0 2.8
No adjustment has been made to the net income generated for the period from the
partnership formation on 25 March 2007 to 31 March 2007 the end of quarter one
as it is not considered to be material.
2 Segmental analysis
Three months ended 31 March 2008
UK Other
shopping commercial
centres properties Exhibition
GBPm GBPm GBPm
Revenue 118.7 33.3 19.5
Rental income including service
charge and other income 114.0 29.4 19.5
Rent payable an d other outgoings (39.5) (10.5) (8.6)
Net rental income 74.5 18.9 10.9
Property trading profits 0.3 0.6 -
Other income - 0.1 -
Deficit on revaluation and sale of
investment and
development property (297.3) (40.8) (7.4)
Segment result before overheads and
finance costs (222.5) (21.2) 3.5
Three months ended 31 March 2008
Other Group
activities total
GBPm GBPm
Revenue 0.5 172.0
Rental income including service charge and other
income - 162.9
Rent payable an d other outgoings - (58.6)
Net rental income - 104.3
Property trading profits - 0.9
Other income 0.5 0.6
Deficit on revaluation and sale of investment and
development property - (345.5)
Segment result before overheads and finance costs 0.5 (239.7)
Three months ended 31 March 2007
UK Other
shopping commercial
centres properties Exhibition
GBPm GBPm GBPm
Revenue 104.6 24.1 -
Rental income including service
charge and other income 104.6 24.1 -
Rent payable and other outgoings (32.8) (4.6) -
Net rental income 71.8 19.5 -
Other income - 0.1 -
Gain o n revaluation and sale of
investment and
development property 126.2 30.1 -
Segment result before overheads and
finance costs 198.0 49.7 -
Three months ended 31 March 2007
Other Group
activities total
GBPm GBPm
Revenue 0.3 129.0
Rental income including service charge and other
income - 128.7
Rent payable and other outgoings - (37.4)
Net rental income - 91.3
Other income 0.3 0.4
Gain o n revaluation and sale of investment and
development property - 156.3
Segment result before overheads and finance costs 0.3 248.0
Year ended 31 December 2007
UK Other
shopping commercial
centres properties Exhibition
GBPm GBPm GBPm
Revenue 424.8 126.3 24.7
Rental income including service
charge and other income 411.7 110.3 24.7
Rent payable and other outgoings (122.9) (34.9) (14.6)
Net rental income 288.8 75.4 10.1
Property trading profits 1.5 1.4 -
Other income - 0.3 -
Gain/ (deficit) on revaluation and
sale of investment and
development property (284.5) 0.6 4.8
Segment result before overheads and
finance costs 5.8 77.7 14.9
Year ended 31 December 2007
Other Group
activities total
GBPm GBPm
Revenue (1.2) 574.6
Rental income including service charge and other income - 546.7
Rent payable and other outgoings - (172.4)
Net rental income - 374.3
Property trading profits - 2.9
Other income (1.2) (0.9)
Gain/ (deficit) on revaluation and sale of
investment and
development property - (279.1)
Segment result before overheads and finance costs (1.2) 97.2
3 Gain/ (deficit) on revaluation and sale of investment and development
property
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Gain/ (deficit) on
revaluation of investment and
development property (346.6) 156.2 (316.5)
Gain on sale of investment
property 1.1 0.1 37.4
Gain/ (deficit) on
revaluation and sale of
investment and development
property (345.5) 156.3 (279.1)
4 Impairment of goodwill
Following an impairment test, required under IAS 36, the goodwill arising on
the acquisition of the Covent Garden Restaurants has been written off in full.
As a result, a charge of GBP21.6million has been made to the Income Statement
in the quarter. This is due to the advanced state of the plans to reconfigure
the buildings in which they are located. These plans are however, subject to
commercial agreement.
5 Finance costs
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Gross interest payable - recurring 63.0 52.8 224.4
Interest capitalised on
developments (4.6) (3.1) (15.1)
Interest payable 58.4 49.7 209.3
Costs of termination of
financial instruments 9.7 7.4 2.0
Profit on repurchase of CMBS notes (11.8) - -
Issue costs written off on
redemption of loans - 0.9 1.3
Exceptional finance (income)/costs (2.1) 8.3 3.3
6 Taxation
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Current tax on profits
excluding exceptional items
and property disposals (0.4) 0.7 2.7
Deferred tax:
On investment and development
properties (7.7) 1.9 8.7
On derivative financial
instruments 2.7 20.2 15.6
On other temporary differences 0.9 (0.2) (0.5)
Deferred tax on profits
excluding exceptional items
and property disposals (4.1) 21.9 23.8
Tax on profits excluding
exceptional items and
property disposals (4.5) 22.6 26.5
REIT entry charge 0.9 0.9 3.9
Tax on exceptional items and
property disposals:
- current tax - (3.1) -
Exceptional tax and tax on
exceptional items and
property disposals - (3.1) -
Taxation (credit)/charge (3.6) 20.4 30.4
6 Taxation continued
Under IAS 12 (Income Taxes), provision is made for the deferred tax liability
associated with the revaluation of investment properties at the corporate tax
rate expected to apply to the group at the time of use. For those properties
qualifying as REIT properties the relevant tax rate will remain 0 per cent, for
other properties the relevant tax rate will remain 28 per cent.
The deferred tax provision on the revaluation of investment properties
calculated under IAS 12 is GBP32.7 million at 31 March 2008 (31 December 2007
- GBP35.8 million, 31 March 2007 - GBP34.1 million). This IAS 12 calculation
does not reflect the expected amount of tax that would be payable if the assets
were sold. The group estimates that calculated on a disposal basis the
liability is GBP76.9 million at 31 March 2008 (31 December 2 007 - GBP86.8
million, 31 March 2007 - GBP50.4 million). If upon sale the group retained all
the capital allowances, which is within the control of the group, the deferred
tax provision in respect of capital allowances of GBP45.5 million may also be
released, and further capital allowances of GBP24.6 million may be available
to reduce the amount of tax payable on sale.
Where gains such as revaluation of development properties and other assets and
actuarial movements on pension funds are dealt with in reserves, any deferred
tax is also dealt with in reserves.
Movements in the provision for deferred tax
As at
31 December Recognised
2007 in income
GBPm GBPm
Revaluation of investment and development
property 35.8 (3.2)
Capital allowances 49.9 (4.5)
Derivative financial instruments (14.7) 2.7
Other temporary differences 2.7 0.9
Net deferred tax provision 73.7 (4.1)
As at
Recognised 31 March
in equity 2008
GBPm GBPm
Revaluation of investment and development
property 0.1 32.7
Capital allowances 0.1 45.5
Derivative financial instruments - (12.0)
Other temporary differences - 3.6
Net deferred tax provision 0.2 69.8
All deferred tax liabilities are expected to have a maturity of more than one
year.
7 Minority interests
Minority interests comprise third party shares of the MetroCentre, the
Exhibition business and other assets; GBP3.0 million underlying profit and
GBP27.8 million deficit on revaluation after taxation (31 December 2007 - loss
of GBP1.9 million and GBP48.3 million deficit on revaluation after taxation).
8 Dividends
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Ordinary shares
Prior period final dividend
paid of nil per share (31
December 2007 - 17.25 p) - - 62.4
Interim dividend paid of nil
per share (31 December 2007 - 16.5p) - - 59.7
Dividends paid - - 122.1
Proposed dividend of nil per
share (31 December 2007 - 17.6p) - - 63.6
9 Investment and development property
UK Other
shopping commercial
centres properties Total
GBPm GBPm GBPm
At 31 December 2007 6,466.0 2,156.8 8,622.8
Additions 35.0 65.0 100.0
Disposals (1.2) (72.6) (73.8)
Foreign exchange fluctuations - 0.6 0.6
Deficit on valuation (297.3) (49.3) (346.6)
At 31 March 2008 6,202.5 2,100.5 8,303.0
UK Other
shopping commercial
centres properties Total
GBPm GBPm GBPm
At 31 December 2006 6,542.8 1,644.3 8,187.1
Additions 17.6 142.8 160.4
Disposals (4.8) (5.6) (10.4)
Foreign exchange fluctuations - (1.2) (1.2)
Surplus on valuation 126.2 30.0 156.2
At 31 March 2007 6,681.8 1,810.3 8,492.1
UK Other
shopping commercial
centres properties Total
GBPm GBPm GBPm
At 31 December 2006 6,542.8 1,644.3 8,187.1
Additions 226.8 835.0 1,061.8
Disposals (14.2) (289.2) (303.4)
Foreign exchange fluctuations - (6.2) (6.2)
Deficit on valuation (289.4) (27.1) (316.5)
At 31 December 2007 6,466.0 2,156.8 8,622.8
The group`s interests in investment and development properties were valued as
at 31 March 2008, 31 December 200 7 and 31 March 2007 by independent external
valuers in accordance with the Appraisal and Valuation Manual of RICS, on the
basis of market value. Market value represents the figure that would appear in
a hypothetical contract of sale between a willing buyer and a willing seller.
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Balance sheet carrying value of
investment and development property 8,303.0 8,492.1 8,622.8
Adjustment in respect of head leases
and incentives 14.8 19.9 12.1
Market value of investment and
development property 8,317.8 8,512.0 8,634.9
10 Trading property
The estimated replacement cost of trading properties based on market value
amounted to GBP39.2 million (31 December 2007 - GBP46.1 million, 31 March 2007
- GBP52.6 million).
11 Trade and other receivables
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Amounts falling due after more than
one year:
Other receivables 17.7 12.8 17.9
Prepayments and accrued income 60.4 56.2 60.6
78.1 69.0 78.5
Amounts falling due within one year:
Rents receivable 33.7 21.1 27.3
Derivative financial instruments 20.4 42.9 25.4
Other receivables 81.1 236.6 60.4
Prepayments and accrued income 45.4 45.2 47.2
180.6 345.8 160.3
12 Borrowings, including finance leases
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Amounts falling due within one year:
Secured borrowings
Bank loans and overdrafts 39.8 124.6 118.8
Commercial mortgage backed securities
("CMBS") notes 29.2 21.6 27.4
Finance lease obligations 5.7 6.6 6.1
Amounts falling due within one year 74.7 152.8 152.3
Amounts falling due after more than
one year:
Secured borrowings - non recourse
CMBS notes 2015 1,062.0 1,1 65.6 1,131.3
CMBS notes 2011 599.7 638.6 633.7
Bank loans 2017 117.2 - 117.2
Bank loans 2016 681.2 511.8 652.2
Bank loans 2013 251.3 251.1 251.2
2,7 1.4 2,567.1 2,785.6
Other secured borrowings
Debentures 2027 226.1 225.8 226.1
Other loans 540.4 183.5 428.9
3,477.9 2,976.4 3,440.6
Unsecured borrowings
CSC bonds 2013 26.6 26.6 26.6
CSC bonds 2009 31.4 41.4 31.4
Other loans - - 43.0
3,535.9 3,044.4 3,541.6
GBP111.3 million 3.95% convertible
bonds due 2010 111.3 109.5 111.3
Finance lease obligations 47.3 46.8 51.1
Amounts falling due after more than
one year 3,694.5 3,200.7 3,704.0
Total borrowings, including finance
leases 3,769.2 3,353.5 3,856.3
Cash and cash equivalents (129.9) (60.5) (188.4)
Net borrowings 3,639.3 3,293.0 3,667.9
13 Fair values of financial instruments
As at 31 March 2008
Balance
sheet value Fair value
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 5.562% debenture 2027 226.1 296.3
CSC 6.875% unsecured bonds 2013 26.6 27.3
CSC 5.75% unsecured bonds 2009 31.4 31.4
US dollars
Fixed rate loans 160.7 161.4
444.8 516.4
Convertible bonds - fixed rate 111.3 140.9
As at 31 March 2007
Balance
sheet value Fair value
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 5.562% debenture 2027 225.8 345.0
CSC 6.875% unsecured bonds 2013 26.6 26.2
CSC 5.75% unsecured bonds 2009 41.4 40.4
US dollars
Fixed rate loans 158.1 159.8
451.9 571.4
Convertible bonds - fixed rate 109.5 174.4
As at 31 December 2007
Balance
sheet value Fair value
GBPm GBPm
Debentures and other fixed rate loans
Sterling
C&C 5.562% debenture 2027 226.1 342.0
CSC 6.875% unsecured bonds 2013 26.6 26.2
CSC 5.75% unsecured bonds 2009 31.4 31.5
US dollars
Fixed rate loans 161.0 160.6
445.1 560.3
Convertible bonds - fixed rate 111.3 152.7
The adjustment in respect of the above, after credit for tax relief, to the
diluted net assets per share (which does not require adjustment for the fair
value of convertible bonds) would amount to 13p per share (31 December 2007 -
21p, 31 March 2007 - 22p).
All other financial assets and liabilities included in the balance sheet are
stated at fair values.
Derivative financial instruments
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Current assets (note 11) 20.4 42.9 25.4
Current liabilities (94.6) (45.0) (97.8)
(74.2) (2.1) (72.4)
Interest rate swaps
Notional principal
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Effective on or after:
1 year 3,313 2,642 3,319
5 years 3,211 2,818 3,220
10 years 2,425 2,350 2,543
15 years 2,100 2,025 2,100
20 years 2,100 2,025 2,100
25 years 1,625 1,550 1,625
Average contracted rate
31 March 31 March 31 December
2008 2007 2007
% % %
Effective on or after:
1 year 5.27 5.31 5.27
5 years 5.16 5.10 5.16
10 years 4.69 4.68 4.72
15 years 4.58 4.57 4.58
20 years 4.58 4.57 4.58
25 years 4.40 4.38 4.40
14 Capital commitments
At 31 March 2008, the group was contractually committed to GBP327.8 million of
future expenditure for the purchase, construction, development and enhancement
of investment property (31 December 200 7 - GBP317.0 million, 31 March 2007 -
GBP375.6 million).
15 Per share details
(a) Earnings per share
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
Number Number Number
millions millions millions
Weighted average ordinary
shares in issue for
calculation of basic
earnings per share 361.6 361.7 361.7
Weighted average ordinary
shares to be issued on
conversion of bonds and
under employee incentive
arrangements 14.6 14.8 14.7
Weighted average ordinary
shares in issue for
calculation of diluted
earnings per share 376.2 376.5 376.4
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Earnings used for calculation
of basic earnings per share (306.2) 272.7 (105.0)
Reduction in interest charge
from conversion of bonds, net
of tax 0.8 1.3 5.0
Earnings used for calculation
of diluted earnings per share (305.4) 274.0 (100.0)
Basic earnings per share
(pence) (84.7)p 75.4p (29.0)p
Diluted earnings per share
(pence) (81.2)p 72.8p (26.6)p
Earnings used for calculation
of basic earnings per share (306.2) 272.7 (105.0)
Add back exceptional finance
(income)/ costs (2.1) 8.3 3.3
Add back REIT entry charge 0.9 0.9 3.9
Less other exceptional tax - (3.1) -
(Less)gain / add back deficit
on revaluation and sale of
investment and
development property 345.5 (156.3) 279.1
Add back/ (less ) fair value
movement on derivative
financial instruments 3.5 (109.2) (27.0)
Add back/(less ) deferred tax
in respect of investment and
development
property (3.2) 2.2 4.2
Add back deferred tax in
respect of derivative
financial instruments 2.7 20.2 15.6
Add back/(less ) deferred tax
on capital allowances (4.5) (0.3) 4.5
Add back impairment of
goodwill 21.6 - -
Less amounts above due to
minority interests (27.8) - (48.3)
Earnings used for calculation
of adjusted earnings per share 30.4 35.4 130.3
Adjusted earnings per share (pence) 8.4p 9.8p 36.0p
Earnings used for calculation
of adjusted earnings per share 30.4 35.4 130.3
Reduction in interest charge
from conversion of bonds, net
of tax 0.8 1.3 5.0
Earnings used for calculation
of adjusted, diluted earnings
per share 31.2 36.7 135.3
Adjusted, diluted earnings
per share (pence) 8.3p 9.7p 35.9p
15 Per share details (continued)
(b) Net assets
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Basic net asset value 4,201.1 5,008.5 4,507.0
Fair value of derivative financial
instruments (net of tax) 62.2 (9.8) 57.7
Deferred tax on revaluation surpluses 32.7 34.1 35.8
Deferred tax on capital allowances 45.5 31.3 49.9
Unrecognised surplus on trading
properties (net of tax) 1.4 4.9 1.7
Minority interests on the above (18.0) - (15.9)
4,324.9 5,069.0 4,636.2
Effect of dilution:
On conversion of bonds 111.3 109.5 111.3
On exercise of options 11.6 11.6 9.7
Diluted, adjusted net asset value 4,447.8 5,190.1 4,757.2
(c) Shares in issue
As at As at As at
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Shares in issue, excluding those held
by ESOP trust and treated as
cancelled 361.6 361.8 361.6
Effect of dilution:
On conversion of bonds 13.9 13.9 13.9
On exercise of options 1.2 1.4 1.0
Diluted shares in issue 376.7 377.1 376.5
(d) Convertible debt
3.95 per cent convertible bonds due 2010
At 31 March 2008, 31 December 2007 and 31 March 2007 3.95 per cent convertible
bonds with a nominal value of GBP111.3 million were in issue.
The holders of the 3.95 per cent bonds have the option to convert their bonds
into ordinary shares at any time on or up to 23 September 2010 at 800p per
ordinary share. The 3.95 per cent bonds may be redeemed at par at the company`s
option after 14 October 2008 subject to the Liberty International ordinary
share price having traded at 120 per cent of the conversion price of 800p per
share for a specified period.
16 Summary of changes in equity
Three months Three months Year
ended ended ended
31 March 31 March 31 December
2008 2007 2007
GBPm GBPm GBPm
Opening equity shareholders` funds 4,507.0 4,732.4 4,732.4
Issue of shares 0.1 1.1 4.7
Cancellation of shares - - (7.9)
4,507.1 4,733.5 4,729.2
Total recognised income and
(expense) for the period (306.0) 275.0 (100.1)
4,201.1 5,008.5 4,629.1
Dividends paid - - (122.1)
Closing shareholders` equity 4,201.1 5,008.5 4,507.0
Minority interest
Opening minority interest 201.9 - -
Additions 1.6 176.4 252.8
Reclassification of debt 43.0 - -
Total recognised income and
(expense) for the period (24.8) - (50.9)
Closing minority interest 221.7 176.4 201.9
Total equity 4,422.8 5,184.9 4,708.9
Date: 07/05/2008 08:15:08 Produced by the JSE SENS Department.
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